1. Innovation Management 2012 Stefan Wuyts
Launch
Innovation Management 2012
Stefan Wuyts

2. Agenda Strategic launch decisions Product life cycle and launch cycle
Tactical launch decisions

3. Strategic Givens
Corporate strategy, decisions made earlier, PIC Guidelines.
A specified gross margin: affects funding.
Speed-to-market: affects promotional outlays and schedules.
Commitment to a given channel: affects distribution plan.
Advertising policy: affects promotion decisions.
Pricing policy: affects decision to use penetration or skimming pricing (slide down demand curve).

4. Revision of PIC Goals Customer Acceptance Goals
Use
Satisfaction
Sales
Market Share
Financial Performance Goals
Margins
IRR, ROI
Product Level Performance Goals
Cost
Time to Market
Performance
Quality
Other
Competitive Effect
Image Change

5. Note: goal versus objective
Characteristics of a “good” objective:
Dimension of success or performance
Measure for evaluation
Level to pursue
Specification of time
Goal Compaq in 1990s:
“to become a major competitor in the worldwide computer industry while regaining historical levels of profitability and returns to shareholders”

6. Objective Compaq:
“Annual growth of 20-25% by 2000; best in class return on assets by 2000 in each division”
Objective McDonalds:
“We plan to add between 2500 and 3200 restaurants next year, with about two thirds outside of the US. In other words, we opened more than 6 restaurants per day last year, and in the next year, we plan to open up 8 per day”

7. Type of Demand Sought Primary demand: for new-to-the-world product
Selective demand: for an entry into an established market.
Replacement demand: for a product improvement or upgrade (new computer chip, new compact car)

8. Scope of Market Entry
Roll out slowly — checking product, trade and service capabilities, manufacturing fulfillment, promotion communication, etc.
Roll out moderately, but go to full market as soon as volume success seems assured.
Roll out rapidly — full commitment to total market, restricted only by capacity.

9. Product Positioning Who — Why — How To whom are we marketing?
Why should they buy it?
How do we best make the claim?

10. Who? The Target Market Decision
Alternative ways to segment a market
end-use, geographic/demographic, behavioral/psychographic, benefit segmentation
Micromarketing (small targets) and mass customization (tailoring the good or service to the unique specifications of individual customers)

11. Using the Joint Space Map to Identify Benefit Segments in the Swimsuit Market3 2
Aqualine
Comfort 1
Molokai
Islands
Fashion
Splash
Sunflare

12. Why Should They Buy It?
See concept statement; core benefit proposition; the needs in HOQ; the key reason on the “How likely would you be to buy this if we marketed it?” (product use test)
Formatted in three ways:
Solves major problem current products do not.
Better meet needs and preferences.
Lower price than current items.

13. How Do We Make the Claim?
Product positioning statement is a strategic driver — a core item — not a list of advantages. Some new products get one short sentence — technical items more.
Can be stated as one or more features (what it is).
Can be stated as a function (how it works).
Can be stated as one or more benefits (how the user gains).
Can be stated as a surrogate (no features, functions, benefits – but metaphor).
Features: calories
Function: not often seen
Benefits: saves money, derived benefits
Surrogate: experts say, no equal, who makes it or sells it

14. Trademarks & Registration
Trademark: A word, symbol, logo, word string,
sound signature that identifies a product.
Examples: the GE script lettering, Apple Inc.’s multicolored apple, Nike’s “Just Do It,” the “Intel Inside” sound.
Generally, “trademark” refers to legal aspects while
“brand” refers to marketing strategy.
If a trademark is registered, the firm can keep the trademark forever even if another firm can show prior use.
Trademarks should not be too descriptive of a product type (Light cigarettes).
Should not be confusingly similar to other trademarks (consider Apple Inc. vs. Apple Corps, McSleep vs. McDonald’s).

15. Product life cycle Sales product class Profit margin Maturity
Shake-out
Growth
Introduction
Decline
Time

16. The Launch Cycle Sales Expenditures Sales and Expenditures
Prelaunch Beachhead Early growth
Announcement
Pre-announcements: good or bad?
“Getting the ball rolling”
17-16

17. Tactical Launch Decisions and Actions, Showing Influences on Demand
17-17

18. Appropriate Launch Tactics Given Relative Advantage and Compatibility
17-18

19. Copy Strategy Statement
Communication tools used at launch will have certain deliverables.
The way in which the firm communicates these deliverables to the advertising and promotion creative people is the copy strategy statement.
Typical contents:
The market segment targeted
The product positioning statement
The communications (promotion) mix
The major copy points to be communicated.

20. Motivating Distributors
Increase distributor’s unit volume.
Increase distributor’s unit margin.
Reduce distributor’s cost of doing business.
Change distributor’s attitude toward the line.

21. Price determination
The difficulty of pricing (see work by Dutta, Zbaracki & Bergen on pricing as a capability)
Price should be a function of:
Your marketing strategy (consistency! E.g., price discrimination ~ target markets)
Competition (make cost estimates, reverse engineering, etc.)
Your costs (development costs, overhead costs, direct fixed costs, variable costs). Too often: markup pricing!
Value to the customer

22. Perceived value > Price > Cost
Reservation price = max. willingness to pay (derived from perceived value)
Perceived value > Price > Cost
Price > Perceived value > Cost
Price > Cost > Perceived value
Customer Value
(ceiling)
gap
Price elasticity
of demand
(absolute value)
Cost
(floor)

23. Reference price: standard of comparison (e. g. , 0
Reference price: standard of comparison (e.g., 0.99 € for songs; expected future price; changed by price promotions)